Energy and inflation tariffs threaten growth, esteem Beata Javorcik, European Bank Economist Chief for Reconstruction and Development.
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Thursday, November 4, the European Bank for Reconstruction and Development (EBRD) has revised the increase in growth forecast 2021 (5.5%, compared with 4.2% expected in June) for the 30 countries where it Intervenes, Baltic States in Central Asia. Beata Javorcik, the economist leader of this institution born in 1991 to support the economic transition of post-Soviet space, nevertheless stresses that the renewed inflation and COVID-19 threatens the recovery.
then That the International Monetary Fund (IMF) has revised its growth forecasts in October, you revise yours up. Why this optimism?
Beata Javorcik: The IMF is a little more pessimistic for great advanced savings. We are more positive for the countries we follow, because the mobility of people rebounded faster than expected: she found her pre-paragal level in May, against September for the whole world. However, mobility is decisive for economic activity: when it drops by 10%, GDP declines by 2%. These countries, relatively dependent on the industry, also benefited from the export request, remained supported. Some also have a reasonable level of vaccinations, such as Turkey, where two-thirds of the population received a first dose.
Contaminations flame again in many countries. Could this be able to derail the recovery?
This is one of the sources of concern and the reasons why we qualify this recovery of “sweet-bitter”. In the region, the number of deaths related to COVID-19 per million inhabitants is already four times higher than the world average. This is particularly the case in Bulgaria, Montenegro or Romania with the low percentage of people vaccinated. But this is not a problem of accessibility of vaccines. The message of governments, who seek not to teach the skeptical part of the electorate, lack of clarity. In addition, incentives to be vaccinated, as the obligation to have a health care to work in Italy, are low.
What will be the most weakened countries by the resurgence of the Inflation?
This is the other cloud that weighs on the recovery. For example, the share of incompressible expenses related to heating and energy represents 25% of household spending in Romania and 22% in Hungary, compared to 7% in Germany. Inflation will severely penalize the 10% of the poorest households in Eastern Europe and Central Asia: for them, the share of these energy expenditure is 28% on average, against 19% in Italy or in Germany. The pressure for governments to take steps to these households will increase. In addition, in many of these countries, salaries are progressing and retreating are indexed to the price index, which will fuel inflationary pressures.
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